Federal cuts could hit patients, drug companies quickly

By David Sell, Inquirer Staff Writer

Posted: February 28, 2013

If the automatic federal budget cuts kick in Friday, patients and pharmaceutical companies - and the authorities paid to protect the first group and watch over the second - could be affected both soon and over time.

Evaluations of drugs and medical devices might take longer as the Food and Drug Administration curtails operations. Patients might not get some medicine. Philadelphia International Airport handles shipments of products and executives in the globalized drug business, so customs inspections, screening of passengers, and air traffic control might delay delivery of both.

Philadelphia has also been a hub of investigation and prosecution of health-care fraud, and the Justice Department expects temporary furloughs of employees.

Earlier this week, the White House said the legally mandated cuts would mean reductions of 13 percent for defense programs and 9 percent for nondefense programs through the fiscal year's end Sept. 30. Last fall, the Office of Management and Budget estimated an 8.2 percent cut for the FDA would amount to $318 million.

"A sequestration of the magnitude contemplated, and this late in the budget year, will have public-health consequences for an agency that is already making every dollar count," FDA spokeswoman Erica Jefferson said.

As of Tuesday, Jefferson said, the FDA did not anticipate employee furloughs but would meet its tighter budget through cost cuts in travel, training, contracts, and collaborations. The FDA has a regional office in Philadelphia.

User fees paid by branded- and generic-drug companies were meant to help fund the FDA's evaluation process, but budget cuts won't help that effort.

"All of that will add up to slowing the market entry of cost-saving generics," said Claire Sheahan, vice president of communications for the Generic Pharmaceutical Association.

The White House said cuts to the AIDS Drug Assistance Program could result in 7,400 fewer patients having access to HIV medications and about 424,000 fewer HIV tests being conducted.

In a Feb. 1 letter to Sen. Barbara A. Mikulski (D., Md.), Attorney General Eric H. Holder Jr. said the Justice Department's plans to cut $1.6 billion from its budget included furloughs of up to 14 days for FBI agents and analysts, some of whom investigate health-care fraud. Using data on past caseloads, local U.S. Attorney's offices would handle 2,600 fewer cases (1,000 criminal and 1,600 civil). Completed cases brought in $14 billion in criminal and civil penalties in the 2012 fiscal year.

"While some of the effects would be felt in Washington, D.C.," Holder wrote, "the impact would be most severe at the local level as our investigative offices, prosecutors, the U.S. marshals, and the federal courts work to implement these spending reductions in coordination with each other."